What are public goods

What are public goods

People’s well-being depends on a mix of private goods and public goods. Private goods are those which we can appropriate–call “ours”, e.g. by paying a price for them in the market. These goods tend to be excludable: they can de parceled out to individual consumers in line with their demand. For example, some people may like to buy just half a loaf of bread and others may prefer a full loaf.
Public goods have the opposite characteristic: they are the goods (things and conditions) that we encounter in the public domain, affecting all (such as many types of noise or pollution) or available for all to use (such as a public radio broadcast or the legal system).

Some goods lend themselves more than others to being public. These are especially goods that have nonrival properties, i.e. whose consumption by one person does not diminish their utility for others. The light of the candle is an example: it can help many people see in darkness. Goods with a strong potential for being public also include those that are technically or economically nonexcludable. However, these are very few. The warming rays of the sun and the moonlight are examples.

However, in most instances it is a matter of policy choice whether and to what extent goods have either public or private properties. Or, publicness and privateness can be a matter of oversight and neglect: things (such as pollution) may just be “left” public, although it could be more efficient to exclude them; or we may not have the requisite knowledge for determining whether a particular good would be better more/less public or  private.

Thus, the definition of public goods can be formulated in a two-tier way:

Tier 1: Goods have a special potential for being public if they have nonexcludable benefits, nonrival benefits or both.

Tier 2: Goods are de facto public if they are nonexclusive and available for all to

Project coordinator: Richard Tanter
17 May 2008